“What Good Are Economists?” and “Are Economists Overrated?”

rfdecon-sfSpanIn the aftermath of the global recession and the financial crisis, economists escaped largely unscathed. Thanks to the behaviour of banks and taxpayer anger at them, most people spared economists from much critique. However, five years since the first collapse, economists seem to be getting scrutinised a little more closely, albeit mainly in the American context, and it has led to an interesting debate about the profession.

I came across two of them – one in the NYT and the other on Project Syndicate – and thought I’d share them here.

The ‘Room for Debate’ opinion pages of the New York Times (NYT) have an interesting discussion going, with leading and out-spoken economists around the world. This article ‘Are Economists Overrated?’ argues that,

One in 100 articles in The New York Times over the past few years have used the term “economist,” a much greater rate than other academic professions, according to a recent article in The Upshot. Economic analysis and pronouncements are crucial to most policy decisions and debates. But given the profession’s poor track record in forecasting and planning, and the continued struggles of many Americans, have we given economists too much authority?

Although in Sri Lanka there is very little evidence-based anything, leave alone evidence-based policymaking with economists at the heart of it, in many governments around the world, economists play a prominent role in policy.

As one commentator has written in the NYT debate,

No government has a chief anthropologist or a corps of philosophers employed in its departments. The president has no Council of Sociological Advisers. There are, though, many economists in positions of influence in government or commenting on government decisions and shaping the kind of debate we have about politics and policy.

Interestingly, the new UNP-led government has a couple of economists in the cohort of Ministers as well – Dr. Harsha De Silva (Deputy Minister of Policy Development and Economic Affairs) and Eran Wickramaratne (Deputy Minister of Highways and Investment Promotion).

Another recent article argues that although economists have failed to fully predict financial crises, they have created vast amounts of wealth for the global economy without being directly attributed to it. In this article ‘What Good Are Economists?’ by Robert Shiller, a Nobel Laureate in 2013, he argues that,

A cynic might ask, “If economists are so smart, why aren’t they the richest people around?” The answer is simple: Most economic ideas are public goods that cannot be patented or otherwise owned by their inventors. Just because most economists are not rich does not mean that they have not made many people richer.

I guess, whether in America or in Sri Lanka, economists have a key role to play in supporting policymaking with evidence-based knowledge and critical insight. More of us need to analyse and explain better, rather than prognosticate and pontificate. And we need to be acutely mindful that our “clients” aren’t always just companies and governments; we need to get better at talking economics with regular citizens too.

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